Could you create a one time lottery to raise funds for a specific purpose? Suppose a state wants to get funds for a new building but they don’t really want to raise taxes. Could they create a lottery to provide themselves with a few extra bucks for the project?
Marc
If you don’t think a damn Post article is good then don’t post the damn thing to support your position. Don’t get me wrong I do appreciate the effort you went to in providing links those articles. But I do have a limited amount of time so I picked the first one you listed.
Marc
Louisiana government is shady all the way around. I don’t remember how many legislators were indicted in the casino kickback scandal of a few years back, but it was a lot.
Entire books have been written on the graft involved with the administrations of Edwin Edwards, and it looks like he will finally be going to jail. He, more than any other force, is responsible for the state of Louisiana’s gambling industry.
An interesting incident of a few years ago had some people crying “foul” on Louisiana’s lottery. On one of the televised drawings, the cameras went live while the lottery-bimbo was reading the numbers of the balls in the machine. When she realized the camera was on, she looked all confused, glanced off camera, and then took all the balls out and started over.
Of course, all that happened was that one of the trial runs to test the machine got caught on camera. But tell that to all the people convinced that someone was rigging up a draw (maybe to try to match more numbers on a ticket from one of Edwards’ cronies?).
Also, in Arizona last spring, someone figured out that the number 9 never appeared in the daily pick 3 game. No number 9 in over three months of the game. An investigation determined that the computer program used to pick the numbers (no ping pong balls here!) had a glitch that ignored the number 9. So of course, anyone playing a daily set that included “9” was just throwing money away.
Uh, I could be mistaken but I thought the income tax was progressive.
Marc
Well, then pick the last damn one I listed instead. Dammit.
divemaster: I also think there is an element of cruelty in dangling a multi-million dollar carrot in front of people who can hardly afford to pay rent, eat, and take care of their health.
True, and I also find it somewhat embarrassing that we spend money on lottery advertising trying to con the public into ignoring the basic facts of statistics—on the grounds that it will provide us money to teach their children math. Little cognitive dissonance there? Obviously if this project were truly succeeding, it ought to go broke as new generations of math-savvy citizens ignore its appeal (yeah, right). I know that we can’t always look to our governments for selfless public service, but it seems that at least they ought not to be actively encouraging us to do something that is financially stupid. “Don’t invest that extra income! Spend it on participating in a random process with an infinitesimal expected return!”
So SouthernStyle, how much money do we spend on lottery advertising? At least when we levy a tax we don’t have to buy billboards to promote it. 
SouthernStyle wrote:
If you think U.S. Federal income tax is “regressive,” you’ve never lived in Europe.
That’s exactly what I’ll do next time, dammit!!
Marc
Lotteries are more taxing to the poor, but then so is nearly every other vice, including alcohol, tobacco, pornography, or crack or prostitution if they were legalized.
Someone needs to explain to me how a lottery is a tax. It may be regressive in so much as the poor spend a larger percentage of their income on it but that doesn’t make it a tax.
Marc
grin Not to be a damn jerk, Marc, but I’m relatively certain that the issue of lottery as taxation is pretty well covered in those law review links I provided…
I’ll take my own whack at the “lotteray as tax” thing, too–it’s redistributive. It’s government-sponsored. A portion of the proceeds are ostensibly earmarked for particular public funds. Sure, it’s voluntary…so’s a sales tax, come to that. Don’t want to be taxed on a sale? Don’t make the purchase. Anyway, given those characteristics, it sure sounds like a form of taxation to me, albeit not a particularly pernicious one.
I agree with Gadarene that the lottery is a poor tax, I just can’t articulate it as well as his links, so go there…
Speaking of that episode on A&E, remember the guy who pointed out that, at odds of approximately 14 million to 1, basically the odds of winning the jackpot were the same whether or not you bought a ticket!
Yes, I know, but the jackpot in CA passed $20M again this week, so while at the grocery store…
You could – but only if you were already in the lottery business. The startup costs are so prohibitive that it’s just not practical to fire up a lottery as a “single use” fund raiser. It literally takes years to recoup the startup investment.
Certain costs don’t change. You need a central computer system, backup systems, network infrastructure, personnel, etc. There comes a point where you will need MORE of these things, but whether you’re selling 1 ticket or 1 million, you’ve got to buy the “starter set” first.
Large states get more benefit of “economy of scale”. Their payout to the lottery vendor for setup, running, and maintaining the lottery is approximately two cents on the dollar. The lottery itself consumes about ten cents on the dollar. (Since all the work and costs are borne by the vendor it makes you kind of wonder where your tax dollars really go, huh?)
Regarding Regressive/Progressive – the current tax structure is referred to as “progressive” because the rate goes up as does one’s income. However, the entire taxing structure is “regressive” in the way that is separates it from its owner. According to the Miriam Webster Collegiate Dictionary, the way the terms are used to describe the tax structure is the third definition of “regressive”.
I LIKE my one in 1.38 million shot at winning the Lotto 6/49 every week (I buy ten tickets. One ticket has a (1/4948474645*44)/6! chance of winning, which is 1 in about 13.8 million.) It’s fun. Besides, a neighbour hit the $10 million jackpot a few years back, and if that dork can win, so can I, even if it will take ninety thousand years to do it.
Question: Lotteries ARE a regressive form of revenue generation, but how many people actually believe the odds are even? If you go in dreaming but knowing you’re going to lose forty cents on the dollar, it isn’t fraudulent and can reasonably be said to simply be an entertainment product.
On the other hand, I can believe that lower stakes games seem to fool people; I’ve had people tell me “oh, I make money on slot machines, I know where the winners are,” blah blah blah. When you try to explain that
A) There is no possible way YOU will notice that certain machines pay off a lot and the CASINO won’t notice - I am sure the casino has every machine measured down to the penny,
B) You can tell me all day you win more than you lose at Bingo, but I can figure out the odds and I know that’s impossible given the number of times you’ve gone,
C) If your brother was such a slot machine God, he wouldn’t be driving a Civic, and
D) You will always tend to rememebr winning more than losing,
…They don’t listen. If all the people I know who claim to be able to consistently beat casinos could actually do it, Vegas would be out of business. I never run into anyone who thinks they know how to beat the LOTTERY, though, which has a sort of ethereal, dreamy quality to it.
Of course, halfway through that show on gambling on A&E - there were two separate shows - I said to my wife, “I’m glad I just play the 6/49. Can’t get addicted to something THAT slow.” Then they did half an hour on lotto addiction. Whoops.
If one views the lottery as cheap entertainment it certainly becomes more tolerable. It started with a referendum in this state, then became law, and ultimately a reality. Originally, I opposed the lottery on moral grounds – but once the voters spoke the lottery became a reality.
I do play occasionally. But not often. And it IS a form of entertainment. When my wife and I are travelling we’ll spent 2 to 5 dollars on the “dream” and for many hours it becomes something to look forward to. It takes only a few seconds to buy the things, but generates hours of dreaming and conversation. A couple of bucks a week is NOT going to change my lifestyle.
When looked at in this light, it is certainly cheaper entertainment than going to the movies.
Think about it a second. Three dollars for three lotto tickets versus thirteen dollars for two movie passes (plus ten dollars for cokes/popcorn). My three dollars investment actually stimulates interaction between my wife and I in the form of conversation. The money spent at the movies garners two hours of silence.
But not all people play responsibly. Just as not everyone drinks adult beverages responsibly, drives responsibly, or does anything else in a responsible fashion.
I’m still not “gung-ho gotta have a lottery”, but I’m no longer “keep that damned thing out of my state” either.
One more thing – in many casinos the slots machines are now electronic and hooked to a master computer. The chances of winning are no longer based on an anomaly of the wheel, but of the central computer’s random number generators.
Meant to leave this quote earlier:
“Of course the game is rigged, but don’t let that stop you. If you don’t play you can’t win.”
Lazarus Long
Do you understand the meaning of the words “progressive” and “regressive” when spoken in the context of taxation?
Probably a good idea to read http://www.psnw.com/~bashford/taxation.html before you post again.
Certainly you’re not equating the voluntariness of buying a lottery ticket with being forced to pay a sales tax when you buy food, clothing, etc.?
By the way, one point noone seems to realize (forgive me if I’m wrong) is that if you did away with state-run lotteries, do you think people wouldn’t buy lottery tickets anymore? Of course not, others would just start their own (illegal) lotteries. That’s the way it was before state lotteries. And with those, the money goes to criminals, not to education or general ops or whatever. Do you think you’re gonna stop people from being stupid? Not bloody likely.
Yours,
jahn
Why not? Proceeds from both are being recouped for public funds; no one’s forcing you to make either purchase. I don’t view the earmarked monies from a state lottery as equivalent to a sales tax, of course, but in the question of “lottery as taxation,” they’re not fundamentally different.
But a better comparison would be to an excise tax on a luxury rather than a tax on a necessity. Isn’t the state’s large takeout from the lottery pool the equivalent of the taxes it collects from cigarettes or liquor? If you want to smoke, you have to pay x percent to the state; if you want to play the lottery, you have to pay y percent to the state.